Commerce Secretary-designate Howard Lutnick appeared to give Canada (and Mexico) an out on potential tariffs today, suggesting that if action is taken to secure the border and shut the flow of fentanyl across the border, that there will be no tariffs.
Commerce Secretary-designate Howard Lutnick: “Shut your border and stop allowing fentanyl into our country, killing our people. This is a separate tariff to create action from Mexico and action from Canada… If they execute it, there will be no tariff.” pic.twitter.com/zBmtKwd0oS
— Rapid Response 47 (@RapidResponse47) January 29, 2025
Polymarket traders remained unconvinced, with odds of Trump imposing tariffs on Canada before March trading above 80%. See below for (the very illiquid) current implied odds from Polymarket.
However, Canadian energy stocks, which have been gyrating wildly based on tariff headlines, seemed much more optimistic and surged on the day. The XEG Energy ETF was up ~1% on the day, despite WTI oil prices being down ~$1/bbl to $72.86/bbl as markets approached their close for the day.
Chart courtesy of StockCharts.com
Stay tuned for more as the tariff on/off headlines are sure to be a driving factor for markets for the foreseeable future until more clarity is given.